Choice of Law — First Party Uninsured Motorist — State of Contract Formation

Uninsured Motorist cases are founded in contract law. Uninsured Motorist cases are lawsuits against a person’s own insurance company to recover those damages caused by someone who did not have insurance or who did not have enough insurance. Usually, it is as a result of a car accident. But Uninsured Motorist cases can arise out of being injured as a passenger, pedestrian, or even being a bicycle rider!

When an insurer does not settle an Uninsured Motorist case and a Plaintiff sues and gets more than the coverage limits, the Plaintiff can recover the excess judgment if his or her lawyer can show certain factors and perfects the claim. First, such an effort to recover the excess judgment is called a “bad faith” claim. Next, if the bad faith claim is against one’s own insurance company, it is called a “first party” bad faith claim. Such a “first party” bad faith claim has to be perfected by filing a civil remedy notice under Florida Statute 624.155. You can see that law by clicking on this link: http://www.flsenate.gov/Laws/Statutes/2011/624.155. Anyhow, if a Plaintiff gets an excess judgment and can show bad faith and that they complied with Florida Statute 624.155, he or she might be able to get even more money than the policy of insurance they paid for.

On March 30, 2012, the 5th District Court of Appeals ruled in a bad faith first party case. The case was Higgins v. West Bend Mutual Insurance Company. The Higgins were from Minnesota and their insurance policy, a contract, was entered into in Minnesota. They got into an accident while vacationing in Orlando. The Higgins recovered $100,000.00 from the person who caused the accident, or the “third party”. Then, they presented their case to their own insurance company for underinsured motorist coverage. They had $100,000.00 in uninsured motorist coverage. Their own insurance company refused to pay that. So they went to trial. And they won a $260,000.00 verdict. The court ordered West Bend Insurance Company pay their $100,000.00 limits, which they did.

But the Higgins wanted to recover the excess judgment. And they pursued it under Florida’s Civil Remedy and Bad Faith laws described above. The insurance company defended on the grounds that the law that governs is the law of where the contract was executed, the principal of “lex loci contractus”. And the since the insurance contract was executed in Minnesota, the insurance company relied on Minnesota law which does not have a provision for “first party” bad faith. The Higgins argued that the law that applied was Florida Law, where the contract was performed. And Florida Law has a provision for “first party” bad faith.

The trial court ruled for the insurance company. On appeal, the 5th DCA held that questions of obligation of contracts are substantive and that the principal of lex loci contractus applies. That means that the 5th DCA held that the law of where the contract was executed, or formed, is the law that governs. Therefore, the Court ruled that the Higgins were out of luck and did not have a claim for “first party” bad faith because Minnesota law did not provide for such a claim.

In the end, while the Higgins were out of luck, you may not be. If you are vacationing in Florida and get into an accident, your rights under your uninsured motorist policy will be governed by the State where you bought your policy. And if your home state allows for a bad faith claim, then we will make sure that any analysis of your accident case accounts for that. Either way, we will do the research and make sure that you get the correct advice.

Whether you are vacationing in Florida or a resident, we can advise you on your uninsured motorist claim, analyze whether there is any bad faith, protect your rights and get you the compensation you deserve. Just call us at 305-285-1115 or email us at jonahwolfson@wolfsonlawfirm.com.